6 Things To Know Before Buying Term Insurance Plans

 

Getting a life insurance plan may be one of the most important financial decisions of your life. Having a life cover is, ideally, a long-term commitment. Knowing that it is the right plan for you may help you rest easy about the financial circumstances of your family in the event of your untimely demise.

Term insurance plans in India are one of the most easily available life insurance options. They offer a substantial life cover value at relatively lower premiums. These plans are available online as well as offline. They can earn you tax benefits as well.

With these worthwhile features, many consumers tend to rush into buying a term plan. In doing so, they end up with a plan that may not fulfil their expectations, leaving them wanting more. To ensure that you are getting the best term plan for yourself, it is essential to consider the following factors:

• Purchase timing

When thinking of term insurance plans in India, there is a prevalent misconception that they are only suitable for employed male members or men with dependents. However, term plans can serve anyone who can expect to leave behind survivors or financial liabilities. From the perspective of costs, it is best to buy these plans when you are younger. If you haven’t, plan the purchase in a way that is suitable for your life goals. Also, consider increasing your sum assured or extending the duration, as and when your responsibilities increase.

• Sum assured

The sum assured is one of the most important considerations in a term plan. It is the amount your nominee can expect to receive as the death benefit. If you want to make the best use of your term plan, this amount cannot be chosen at random. It needs to be carefully calculated, considering your means and your family’s needs. The amount should be able to fulfil your family’s needs after you’re gone and take care of any liabilities you leave behind. Another way to ensure the security of your loved ones is choosing an amount at least 10x as high as your annual income.

• Number of plans

The best term plan is the one that eliminates the need for you to have another term life cover. It partially depends on the plan offered by the insurance provider. It also depends on how you tailor the details, such as sum assured, duration, and premium frequency. Thus, when choosing a plan, ensure that it serves your future needs. You can have more than one plan if you feel the need. But before you do, consider making alterations to the existing ones, so you do not have more than one premium to pay.

• Tenure

The ideal tenure for the best term insurance plan depends on your financial situation and your expectations. The longer the plan tenure, the longer you will have premiums to pay. However, it is a safe bet to have a life cover at least until the age of retirement. If you are buying a plan closer to retirement, you may want to keep it till the age of 75-80 years, if your policy allows it.

• Insurer

You may choose the ideal insurance provider for yourself based on two factors. The first would be the availability of a plan that fits your expectations. The second factor is the claim settlement ratio. This ratio represents the number of insurance claims successfully settled by the company. The higher the number, the better the chances of your claims being settled.

• Nominee

Nomination is another significant aspect of your term plan. You can name one or more nominees. Moreover, you can change the nominee at any point, given the policy is in force and premiums are up to date. Ensure that throughout your policy duration, you have formally named a nominee. If they are a minor, you will be required to name a guardian. Nomination ensures that the death benefit reaches the intended recipient.

These are the significant factors you should consider before buying a term plan. Taking the time to get these details right will help you choose the best term insurance for your needs.

Why is it a Good Idea to Invest in Equity Funds?

 

To meet long term financial goals, equity mutual funds are the best option. Despite the availability of several financial instruments on the market, equity-generated capital appreciation is the most significant in the long run. For example, in the previous 5, 10, and 15 years, Sensex has provided CAGRs of 15.71 per cent, 11 per cent, and 10.96 per cent, respectively. This is higher than provident fund interest rates, which stayed in the range of 8.25 per cent to 9.5 per cent per annum for the previous 15 years.

Moreover, investors looking to get higher tax-free returns can opt for ELSS Funds in India. Equity Linked Savings Scheme or ELSS Funds are tax-saving equity mutual funds under Section 80C of the IT Act,1961.

ELSS Funds in India

ELSS funds are equity-oriented plans that invest a significant percentage of their capital in equities or equity-related securities. Because there is a three-year statutory lock-in, the capital gains achieved by investing in ELSS funds are long-term capital gains (LTCG) that are tax-free (up to an income of Rs.1 lakh).

Important Features of ELSS Funds

• The ELSS funds in India invest a minimum of 65 per cent of assets in equities or related instruments.
• The funds are invested diversely, with allocations in big, mid, and small-cap companies based on market circumstances.
• The investment fund has no maximum duration. There is, however, a three-year lock-in term.
• Under the IT Act, an investor can claim a deduction of Rs. 1.5 lakh from his gross total income each year.
• The income generated through the fund is taxable as per the current laws.
  

Why Invest in Equity Funds?

It is not always possible to keep track of the market movements, hence investing in equity funds is a good idea.

Moreover, the funds offer several benefits to investors such as:

Diversification

The ELSS funds invest in companies belonging to different sectors and themes. Companies with a market capitalization ranging from big to small receive allocations based on market conditions and prospective returns. This helps you to diversify your financial portfolio.

No Entry Barrier

Most investment funds enable investors to begin investing with as little as Rs. 500. A person can start investing with a nominal amount and can increase the amount at his convenience.

SIPs

Investors can pay in a single instalment as a lump sum amount, although most individuals prefer the SIP approach. This provides tax advantages as well as the potential to create a large corpus.

Long-Term Financial Goals

Long-term returns on equity funds are considerable. Because markets are turbulent, market swings may be readily handled by staying invested for an extended period. This is advantageous to an investor since the rule of averages takes effect. Investing in equities mutual funds might thus help you accomplish your long-term goals in two ways. For starters, it will provide significantly greater returns than debt funds. Also, since you are investing over a longer period, the risk element decreases significantly.

Given the benefits provided by ELSS funds in India, they have become the preferred choice for investors, particularly young ones. As they seek not just high returns but also tax advantages, making equity funds a good replacement for traditional investment options.

5 Expert Tips on Planning an Affordable Wedding

 

Indian weddings are mostly a grand affair. There are countless functions like Ring Ceremony, Mehendi, Haldi and Sangeet before the big day. These timeless pre-wedding rituals define the essence of our eclectic culture. But not many might be able to bear the brunt of the financial aftermath. This is especially true amid a pandemic situation. The good news is that you can still have a fabulous wedding ceremony without going into debt.

All you have to do is manage your finances smartly. Realistic planning and preparation save quite a lot from the budget. There is no need to compromise on your special moments. Look at a few smart ways to cut costs if your wedding is still a year away.

1.      Consider a Fixed Deposit

A good way to start planning your wedding is to open an FD. The best bank lets you begin from ₹10,000 and enjoy high fixed deposit interest rates. Watch your wealth grow safely and steadily since FDs are not market-linked. You will receive an assured sum at the end of the maturity period. All you have to do is avoid breaking it via premature withdrawals. The top bank professionals make the online FD application quite easy. The money can be used to ease the financial burden of the wedding.

2.      Non-Traditional Venues

Try to skip lake palaces, luxurious farms and sprawling banquets. Go for the out-of-the-box ones like botanical gardens or community centres. You can also hold it at someone’s property with a big backyard. This is quite feasible if you have a compact guest list. You will be able to supply own catering and décor from local vendors. This saves you from booking expensive mandatory packages.

3.      Weekday Wedding Date

Wedding venues usually struggle to fill the weekdays. You might be able to negotiate and settle on a lower price by choosing a mid-week day. Try to book at least 6-7 months before the wedding date. Go for the spring season instead of summers since it is less popular and can help crack an affordable deal. Try to open a fixed deposit in India at least 1-2 years around your estimated wedding year. 

4.      Recruit Friends and Family

This serves as a dual purpose of involving the family while taking wedding favours. Assign small jobs to your uncles and aunties. For example, photography, tending to the food counter, arranging the lights and flowers or similar tasks that the ceremonies entail. Utilizing personal networks instead of hiring professionals can save a great deal of money. You do not have to use a big chunk of your online FD to cater to these additional services.

5.      Wedding Dresses

Indian lehengas and sherwanis are often priced sky-high. This is simply due to heavy embroideries, glassworks and embellishments. Try to purchase simple attire at an off-season. This can help you get amazing deals and discounts. Avoid the high-end designers. Consider renting instead at half prices for the pre-wedding functions. This saves quite a lot to splurge on excellent bridal couture on your big day. 

Make the best use of a fixed deposit calculator in India to get an estimate of the matured amount. This helps in planning different expenses in moderation for a successful wedding.

 

Benefits of Optional Features of Term Plans

 

When it comes to buy term plan or life insurance coverage, you may find yourself wondering if you should opt for optional features in your policy. Before you decide, you need to weigh the benefits of optional features of term insurance against those included in your particular type of policy.  

The benefits of optional features of term insurance include: 

• Higher Level of Coverage 

These optional features of term plan insurance are designed to allow you to obtain a higher level of coverage for your money. For instance, you may get to decide that you want to pay an annual or yearly premium that is less than what you'd pay if you opted for the "full amount" premium. If this sounds like something that you can do, you will have to take the time to learn about all of the perks of optional features before you decide whether or not you are going to pay this additional amount.  

• Lower Premiums with Time

While you will have to pay more initially, the benefits of these policies will pay off in the form of lower monthly premiums after the first year is up. Some people even find that the benefits of the policy will pay them off completely within their first year of owning the policy. It comprises no waiting period and no restrictions on the number of years that you can use your benefits. 

• Choose as It Suits You

While it may get to seem like you are paying more for optional features of a policy, there are many benefits of choosing the coverage you need. For one thing, you may pay too much for an "all-risk" policy. If this does describe your situation, it may be easier for you to choose a "limited risk" policy. Basically, you will be able to obtain better rates if you make changes to your lifestyle, such as stopping smoking and losing some weight. While you may have to pay more initially, you will end up saving money over the long run by avoiding high-priced medical bills and suffering from more expenses. 

• Modifiable & Flexible Plans

Another benefit while you buy term plan is the ease with which it can be modified. If you find that the policy you are keeping is too restrictive, you can often change the benefits and premiums relatively easily. In fact, some people find that they can actually use some of the benefits of optional features of term life insurance. The level of flexibility allows you to choose the benefits that best suit your particular needs without having to completely alter the structure of your policy. 

Of course, there are many things to consider when it comes to what is term insurance and its perks. There remain a number of things that are not considered as standard benefits, such as cash value and universal service benefits. The optional features offer significantly better returns than traditional policies would. However, they can actually be less expensive overall since you do not need to pay for any additional benefits as long as you take all of the necessary steps to maintain them, such as maintaining the premium payments on time.